Sebi panel report on bourses pro-monopoly: MCX-SX

MCX Stock Exchange today said the recommendations made by a Sebi-appointed committee on bourses would promote monopoly and anti-competitive business practices in the market.

Without naming the largest stock exchange NSE, rival MCX-SX said the recommendations made by the Bimal Jalan committee "would continue to protect the monopolistic market structure and the perverse anti-competitive practices adopted by some".

The comments followed the Sebi-appointed committee submitting its report, which the regulator today put out on its website for public comments.

There are two national stock exchanges, BSE and NSE, in the country, while MCX-SX, a new bourse, allowed to trade in currency futures only. Its plea to trade in equity and other segments has been rejected by Sebi, which did not find the shareholding pattern as per its eligibility criteria.

MCX-SX has often charged that Sebi was protecting NSE's monopoly by not allowing competition.

Commenting on the panel report, MCX-SX MD and CEO Joseph Massey said: "The immediate reading of this report indicates that the report advances more argument to preserve the current market structure and in fact further reinforces its continuation despite the fact that we do not have a well developed capital market with full range of products and services and also we are underpenetrated."

"These recommendations, if accepted, would continue to protect the monopolistic market structure and the perverse anti-competitive practices adopted by some," he said.

Massey said that banks and insurers, which were more critical than exchanges in an economy, were allowed to raise capital from listing and also have more competition.

At the same time, the exchanges were not being allowed to list and the new recommendations would now prevent new entrants in the exchange space, he said.

"While the report does express their desire for more competitions but the desire is lost in completely contradictory recommendations on type of shareholders, anchor investors, extent of shareholding, means of funding, etc.

"Exchanges and Clearing Corporation collectively will now require capital of Rs 400 crores. A bank can be set up by Rs 300 crores of capital and insurance companies require a capital of Rs 100 crores," MCX-SX said.

"It is surprising to see why policy makers are not willing to open Indian capital market when we have only one per cent of people using capital markets and we have failed in creating a Bond Market which is 80 per cent of the global exchange business," it added.